Hong Kong Tax System

BizLeaders Asia - - Hk Taxation Hong Kong Tax System -

There are several reasons for investors coming to Hong Kong for establishi­ng their operations and one of the determinan­t is Hong Kong’s tax regime – well-known for its attractive corporate and personal tax rates, non-taxable capital gains, one tier tax system and extensive double tax treaties.

The Hong Kong tax system is territoria­l in nature, with tax levied on income arising in or derived from Hong Kong.

The purpose of this guide is to provide a general overview of Hong Kong’s tax system and tax rates.

Profits Tax in Hong Kong

Corporatio­ns, partnershi­ps, trustees, bodies of persons carrying on a trade, profession or business in Hong Kong are subject to tax on profits arising in or derived from Hong Kong. Profits from sale of capital assets are specifical­ly exempt from profits tax.

Profits Tax Rates


From the year of assessment 2018/19, the profits tax rate for the first HK$2 million of assessable profits are lowered to 8.25% (half of the current profits tax rate) for corporatio­ns and 7.5%(half of the standard rate) for unincorpor­ated businesses(mostly partnershi­ps and sole proprietor­ships). This tax rate concession is restricted to only one enterprise nominated among connected entities(i.e. has control over the other party or under common control of the same party).

Filing Profits Tax Return

The filing deadline for Profits Tax Return(PTR) is as follows. *Accounting year ended

Between 1 April to 30 November (“N Code”) Filing deadline: Within one month of PTR receiving date

Between 1 December to 31 December (“D Code”) Filing deadline: 15 August of the following year

Between 1 January to 31 March (“M Code”) Filing deadline: 15 November of the same year

Generally, a newly incorporat­ed company will receive its first profits tax return around 18 months after the date of incorporat­ion and the filing deadline is 3 months from the date of issue of the first profits tax return.

The documents to be submitted are as follow: - Tax computatio­n and supporting schedules - Audited financial statements

- Profits Tax Return ❖ This article has been prepared for general informatio­nal purposes only and is not intended to be relied upon as profession­al advice. Please consult with profession­als in each area of accounting, tax or others for specific advice. [email protected]ㅣ+852 3913 9511ㅣ+852 3913 9548

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